Market Movers

Follow these outside forces that could reshape the ag landscape

You don’t have to be the farm office version of CNN to monitor important global trends such as interest rates and demographic shifts. Instead, tune into a few key experts and resources that can provide you access to great information about which microeconomic and macroeconomic factors might affect your commodity marketing strategy in 2016.

What Does It Mean To Me?

Regulatory and monetary policies are at odds in the U.S., limiting growth.

A strong dollar limits export competitiveness, but new markets will emerge.

Values for other commodities such as oil are worth monitoring.

There’s no way to scientifically rank those factors by bottom-line impact, but you can evaluate the trends on this page against the commodities you sell and the markets you serve. Here’s a look at big-picture issues facing farmers in 2016, as shared by Michael Swanson, agricultural economist and senior vice president at Wells Fargo Bank; Stephanie Mercier, Farm Journal Foundation senior policy and advocacy adviser; and USDA.

Domestic Economy
The U.S. faces a conflict between regulatory and monetary policies, Swanson says, and as a result, “we’re not seeing growth.” Poor growth overall reflects that most economic expansion of late has come from more capital and more productivity at U.S. businesses.

He anticipates gross domestic product (GDP) will be as low in the second half of the decade as it has been in the first half. He also expects wages could experience inflation as the workforce tightens amid a 5.1% unemployment rate.

Global Trade
World population growth and increasing incomes are an undeniable trend, but that doesn’t mean it will be easy to make money in agriculture, Swanson cautions. Keep in mind just four countries—Japan, China, Mexico and Canada—account for 55% of all ag exports.

“Think about how quickly things change,” he says. China, for example, has come out with its weakest growth rate in years.

Meanwhile, the strength of the dollar has made U.S. ag exports less attractive than cheaper-priced commodities from other countries. Yet opportunities still exist. For example, USDA notes Russia is expected to present opportunities for U.S. producers when it reopens its market to beef imports in 2016.